Should You Get Your Teen A Student Credit Card?
I have seen valid arguments for both sides of this issue. While I would never support a card for every teen, there can be security in knowing that your child has a back up for any emergencies. In addition, believe it or not, using a student credit card can be safer than using cash and can offer more consumer protections than a debit card will. If your teen’s student credit card is lost or stolen, chances are, the liability will be zero for any unauthorized charges. But most important, in my humble opinion, is that your teen will have had experience with a student credit card and all of their many hidden traps before they are deluged by the no credit check, no co-signer or no income offer when they finally reach college. Ultimately, though, there are no black and white answers on this issue and I believe a lot will depend on the individual circumstances.
There are now many prepaid cards geared to pre-college teens (teens normally are not legally allowed to get a student credit card in their own name until they are 18).Visa has a card, for example, and is promoting as being parent controlled, re-loadable, and a great tool to teach budgeting and money management to your teens. When it first came on the market this card spurred on a great deal of discussion. Now, there are many versions of this type of student credit card, with a variety of enrollment and reloading fees to go along with it.
You should not be surprised when your teen comes to you and pressures you to get one for them! These student credit cards are being marketed to them as cool status symbols that will make it easier to get the latest must have stuff. The best of these student credit card companies will offer online tools designed to help parents teach their teens about money, credit, and debt. Some cards also actually try to motivate high schoolers to learn more about managing there money. Unfortunately, some focus mostly on encouraging teen spending and give the education component minimal attention.
Many parents can be attracted by the convenience of these student credit cards, which will eliminate much of the need to giving up cash to their teens. Meaning they will not have to take so many trips to the banks ATM machine. I can see parents wanting to use this tool as well to show there teen just want is being spend on them as well as what they are spending. It could put some things into perspective.
Another plus will be that prepaid student credit cards are a lot less riskier than typical credit cards, where you are the one whose credit will take a nose dive if your teen does something irresponsible with your credit card. Such as taking out a large cash advance. With a prepaid student credit card, there is only so much your child can spend (the amount you have loaded on to the card).
Student credit cards.com @ October 29, 2008